Shortage of petrol hits alarming levels Ahmad Fraz Khan Published about 7 hours ago

LAHORE: Prime Minister Muhammad Nawaz Sharif Saturday took strict notice of the fuel shortage in various parts of the country and suspended four officials concerned. After arriving from Saudi Arabia, the Prime Minister called a meeting at the airport and took decisions to improve the situation on immediate basis. The four immediately suspended officers responsible for the crisis included Secretary Petroleum Abid Saeed, Additional Secretary Petroleum Naeem Malik, DG Oil C.M. Azam and Managing Director Pakistan State Oil (PSO) Amjid Janjua, said a press release. The provincial governments were directed to check sale of petrol in black and expedite its supply and delivery. ============================ Petrol crisis: Oil companies, govt trade accusations of culpability KARACHI / ISLAMABAD: Oil companies and government officials continued to trade accusations on Friday, with neither side willing to accept culpability for the sudden crunch in petrol supplies in the northern half of the country. Both sides agree on one fact: there was an unprecedented surge in demand for petrol after the government decided to reduce prices. At a press conference on Friday night, Petroleum Minister Shahid Khaqan Abbasi said that demand had surged by 25% after the 27% drop in oil prices from their peak in June 2014. Both sides also agree that the oil companies did not have the legally required 20 days’ worth of inventory to help deal with supply disruptions. But that is where the agreement ends. Government officials claimed that the lack of inventory was the sole reason for the petrol shortage. Oil and Gas Regulatory Authority (Ogra) Chairman Saeed Ahmad Khan announced at a press conference on Friday that Ogra would be serving notices to oil companies for failing to meet the legally required levels of inventory. But industry officials point out that if inventory was the only issue, then there would also be a shortage of diesel and the shortages would be uniform across the country. “The industry cannot be blamed for this situation. There is no shortage of diesel anywhere and petrol is available at all the pumps in Sindh and Balochistan,” said Aftab Husain, CEO of Pakistan Refinery and head of the Oil Companies Advisory Council (OCAC), an industry group. Husain explained that one ship carrying 50,000 tons of oil products was delayed by a few days. “This, along with heavy fog in Punjab, hampered transportation and disrupted the supply chain,” he said. Diesel is transported through a cross-country pipeline originating at Port Qasim, whereas petrol is transported mostly through trucks going north from Karachi. Husain admitted that the oil industry often does not carry the full 20 days of required inventories, especially when prices are declining, but blamed government pricing policy for the situation. “Petroleum prices are revised once a month and whenever the price drops, we book a loss due to the reduced value of our petroleum stock,” he said. “Complete deregulation of prices is the answer. But whenever we talk about it everyone starts writing against us.” Ogra acknowledges the commercial difficulties faced by oil companies when prices are declining, but appears in no mood to accept this as an excuse for not complying with regulatory requirements, said the regulatory body’s chairman. However, even though he blamed the oil companies for the current crisis, Khan agreed with their stance that oil and liquefied petroleum gas (LPG) prices should be deregulated. “In the beginning it will not be pleasant, but it will be good in the long run due to market competition,” said the Ogra chairman. Yet even though everyone agrees that the oil price drop resulted in an unprecedented surge in demand, the government is planning on decreasing prices even further. The petroleum minister announced at his press conference that prices could be reduced by more than Rs5 per litre in February. Abbasi also appeared to insist that the privately owned oil marketing companies were more responsible for the supply crunch than the state-owned PSO, even though PSO has a 65% share in the petrol market. Sales of petrol tend to rise particularly sharply on the first day of a government-mandated price cut. “Petrol sales hit 40,000 tons on January 1,” admitted the petroleum minister. The current crisis appears to have been worsened by the fact that alternatives to petrol – specifically compressed natural gas (CNG) – have largely been absent from the market due to a shutdown of gas supply to CNG stations in Punjab. Abbasi said that if the weather did not turn too cold, the government might consider reopening some of the supply of natural gas to CNG stations. Natural gas is the primary heating fuel in most of the affluent parts of urban Pakistan. Meanwhile, at a hearing at the Senate finance committee on Friday, Federal Finance Secretary Waqar Masood suggested that the current shortage is just the tip of the iceberg and that the country could be facing a rough six weeks before the crisis is fully resolved. Masood’s timeline is far longer than the 10 to 12 days promised by cabinet members during their speeches in the National Assembly on the same day. The finance secretary pointed out that there is a 45 day lag between when an oil company opens a letter of credit (LC) with a bank for oil imports and when the petrol is actually delivered to petrol pumps across the country. The finance ministry has released Rs17 billion to the state-owned PSO to handle its LC requirements, but admits the company needs Rs27 billion for this month alone. Masood admitted that the inter-corporate circular debt in the energy industry, caused in large part by government entities refusing to make the full payments they owe power companies, was at least partially the cause of the crisis. PSO has defaulted on at least Rs110 billion in LCs owed to its foreign suppliers. The finance secretary claimed that the government had been making timely payments of the subsidies it owes to power companies, which in turn owe PSO money for the fuel they use to generate electricity. However, he admitted that the finance ministry refused to pay amount related to the cost of theft, meaning that the power companies still do not have enough money to pay PSO. When the power companies fail to pay PSO on time, PSO defaults on its payments due to foreign suppliers, who then refuse to supply more fuel without payments made upfront in cash. The finance ministry has paid out Rs222 billion power subsidies so far this fiscal year, said Masood. The finance ministry has been urging the water and power ministry to crack down on electricity theft so that the circular debt problem can end once and for all. Sources told The Express Tribune that another reason for the supply crunch was Finance Minister Ishaq Dar’s refusal to allow state-owned PSO to buy US dollars to make oil payments to its international supplies in December, because doing so would have reduced the country’s foreign exchange reserves below the $15 billion mark the minister was targeting. Despite hearing that the drop in oil prices was at least partially responsible for the sudden supply shortage, the Senate finance committee passed a resolution demanding that the government reduce domestic oil prices even further, to fully match the global price drop. Published in The Express Tribune, January 17th, 2015. ============== By Zafar Bhutta / Saad Hasan / Shahbaz Rana / Photo: Shahbaz Malik Published: January 17, 2015 Customers throng a filling station in Lahore amid severe dearth of petrol. PHOTO: SHAHBAZ MALIK/EXPRESS KARACHI / ISLAMABAD: Oil companies and government officials continued to trade accusations on Friday, with neither side willing to accept culpability for the sudden crunch in petrol supplies in the northern half of the country. Both sides agree on one fact: there was an unprecedented surge in demand for petrol after the government decided to reduce prices. At a press conference on Friday night, Petroleum Minister Shahid Khaqan Abbasi said that demand had surged by 25% after the 27% drop in oil prices from their peak in June 2014. Both sides also agree that the oil companies did not have the legally required 20 days’ worth of inventory to help deal with supply disruptions. But that is where the agreement ends. Government officials claimed that the lack of inventory was the sole reason for the petrol shortage. Oil and Gas Regulatory Authority (Ogra) Chairman Saeed Ahmad Khan announced at a press conference on Friday that Ogra would be serving notices to oil companies for failing to meet the legally required levels of inventory. But industry officials point out that if inventory was the only issue, then there would also be a shortage of diesel and the shortages would be uniform across the country. “The industry cannot be blamed for this situation. There is no shortage of diesel anywhere and petrol is available at all the pumps in Sindh and Balochistan,” said Aftab Husain, CEO of Pakistan Refinery and head of the Oil Companies Advisory Council (OCAC), an industry group. Husain explained that one ship carrying 50,000 tons of oil products was delayed by a few days. “This, along with heavy fog in Punjab, hampered transportation and disrupted the supply chain,” he said. Diesel is transported through a cross-country pipeline originating at Port Qasim, whereas petrol is transported mostly through trucks going north from Karachi. Husain admitted that the oil industry often does not carry the full 20 days of required inventories, especially when prices are declining, but blamed government pricing policy for the situation. “Petroleum prices are revised once a month and whenever the price drops, we book a loss due to the reduced value of our petroleum stock,” he said. “Complete deregulation of prices is the answer. But whenever we talk about it everyone starts writing against us.” Ogra acknowledges the commercial difficulties faced by oil companies when prices are declining, but appears in no mood to accept this as an excuse for not complying with regulatory requirements, said the regulatory body’s chairman. However, even though he blamed the oil companies for the current crisis, Khan agreed with their stance that oil and liquefied petroleum gas (LPG) prices should be deregulated. “In the beginning it will not be pleasant, but it will be good in the long run due to market competition,” said the Ogra chairman. Yet even though everyone agrees that the oil price drop resulted in an unprecedented surge in demand, the government is planning on decreasing prices even further. The petroleum minister announced at his press conference that prices could be reduced by more than Rs5 per litre in February. Abbasi also appeared to insist that the privately owned oil marketing companies were more responsible for the supply crunch than the state-owned PSO, even though PSO has a 65% share in the petrol market. Sales of petrol tend to rise particularly sharply on the first day of a government-mandated price cut. “Petrol sales hit 40,000 tons on January 1,” admitted the petroleum minister. The current crisis appears to have been worsened by the fact that alternatives to petrol – specifically compressed natural gas (CNG) – have largely been absent from the market due to a shutdown of gas supply to CNG stations in Punjab. Abbasi said that if the weather did not turn too cold, the government might consider reopening some of the supply of natural gas to CNG stations. Natural gas is the primary heating fuel in most of the affluent parts of urban Pakistan. Meanwhile, at a hearing at the Senate finance committee on Friday, Federal Finance Secretary Waqar Masood suggested that the current shortage is just the tip of the iceberg and that the country could be facing a rough six weeks before the crisis is fully resolved. Masood’s timeline is far longer than the 10 to 12 days promised by cabinet members during their speeches in the National Assembly on the same day. The finance secretary pointed out that there is a 45 day lag between when an oil company opens a letter of credit (LC) with a bank for oil imports and when the petrol is actually delivered to petrol pumps across the country. The finance ministry has released Rs17 billion to the state-owned PSO to handle its LC requirements, but admits the company needs Rs27 billion for this month alone. Masood admitted that the inter-corporate circular debt in the energy industry, caused in large part by government entities refusing to make the full payments they owe power companies, was at least partially the cause of the crisis. PSO has defaulted on at least Rs110 billion in LCs owed to its foreign suppliers. The finance secretary claimed that the government had been making timely payments of the subsidies it owes to power companies, which in turn owe PSO money for the fuel they use to generate electricity. However, he admitted that the finance ministry refused to pay amount related to the cost of theft, meaning that the power companies still do not have enough money to pay PSO. When the power companies fail to pay PSO on time, PSO defaults on its payments due to foreign suppliers, who then refuse to supply more fuel without payments made upfront in cash. The finance ministry has paid out Rs222 billion power subsidies so far this fiscal year, said Masood. The finance ministry has been urging the water and power ministry to crack down on electricity theft so that the circular debt problem can end once and for all. Sources told The Express Tribune that another reason for the supply crunch was Finance Minister Ishaq Dar’s refusal to allow state-owned PSO to buy US dollars to make oil payments to its international supplies in December, because doing so would have reduced the country’s foreign exchange reserves below the $15 billion mark the minister was targeting. Despite hearing that the drop in oil prices was at least partially responsible for the sudden supply shortage, the Senate finance committee passed a resolution demanding that the government reduce domestic oil prices even further, to fully match the global price drop. Published in The Express Tribune, January 17th, 2015. ================== Schlumberger To Lay Off 9,000 Workers January 16, 2015 Oilfield services giant Schlumberger plans to cut 9,000 jobs as the global collapse in crude oil prices crimps production in 2015 and perhaps even longer. The cuts — nearly 8% of Schlumberger's 120,000 workers, were announced Thursday "to better align with anticipated activity levels for 2015,'' the company said. With production surging and waning growth, the world is awash with oil. That's led to a collapse in prices that's taken benchmark crude price down more than 50% since last June. Thursday, West Texas Intermediate fell 4.6% to $46.22 a barrel, while Brent crude slipped 2% to $47.67. Yet many forecasters say crude isn't close to bottoming. "In this uncertain environment, we continue to focus on what we can control,'' said CEO Paal Kibsgaard. "We have already taken a number of actions to restructure and resize our organization that have led us to record a number of charges in the fourth quarter. We are convinced that performance must now be driven by an accelerated change in the way we work through our transformation program." The layoffs come despite a relatively solid fourth-quarter earnings report in which the Houston-based Schlumberger increased revenue 6% to $12.6 billion and boosted earnings 11% to $1.94 billion. Schlumberger is also boosting its stock dividend 25%. Houston-based energy explorer Apache Corp. began laying off about 5% of its workers earlier this week. .. Read more: http://www.drillingahead.com/page/schlumberger-to-lay-off-9-000-workers?xgs=1&xg_source=msg_share_page#ixzz3P4ZZEWC6 =========================== Ahmad Fraz Khan Published about 7 hours ago A petrol pump seen deserted due to the shortage petrol.— Online/File A petrol pump seen deserted due to the shortage petrol.— Online/File LAHORE: The country is left with oil stock of less than three days and its import has totally dried up as the Pakistan State Oil defaults on its payments and says it will need at least Rs100 billion and eight weeks’ time to retrieve the situation. According to PSO officials, no oil consignment has arrived at any port in the country for the past two weeks, whereas usually six to eight ships, each carrying 65,000 tons of oil, come to the country in a fortnight. “The company has exhausted all its overdraft (OD) facilities over the past few weeks. All its LCs (letters of credit) lines have been choked as its total receivables now run over Rs215bn,” a PSO official said, adding that the power sector owed Rs190bn and PIA Rs12.5bn. PSO defaults on its payments, needs Rs100 billion to retrieve situation The company’s default on its payments to a few local banks has made all others cautious; no bank is now ready to underwrite PSO’s LCs. Exporters are also not ready to trust the PSO with their commodity without hard cash or bank guarantees. “The piecemeal payments being made by the government cannot provide any relief to PSO given the size of default. On Thursday, the government released Rs17bn, but like all such previous payments, it went into retiring overdue drafts, making no impact on fresh imports. Also read: Petrol shortage continues for third consecutive day “The company needs at least Rs100bn immediately to set things right. Even if it gets the required money, it will need another two months to line up imports and re­store the supply line,” the official said. “Apart from the financial crisis, it is ad hocism at the top that has landed the PSO into this ditch,” said another official. “With the acting managing director sitting at the top of the company and being more interested in import of liquefied natural gas (LNG) — a new pastime of the PML-N — PSO has been sliding deep into crisis,” he said. “No one really knows how a bankrupt PSO will import LNG. Why has it not stopped supplies to the defaulting companies, be it IPPs (independent power producers) or the PIA? “Why did the PSO remain content on small payments of a few billion rupees over the past year or so, which made no difference to the import? “Why did other oil marketing companies (Shell, Total, Caltex), which are duty bound to keep stocks of at least two weeks, fail in their essential business obligation?” the official wondered. All these questions, he added, needed to be answered and should be made part of an investigation into how the company had stumbled into the current crisis. “The government is pressing local refineries to supply oil to the PSO on credit. If this happens, there may be some temporary relief in supplies in the days to come. But the situation will not improve in the long run unless the government arranges Rs100bn, and makes sure that the company gets regular payments from all its buyers,” the official said. Published in Dawn, January 17th, 2015 On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play

Unnecessary litigation scaring foreign investors

Of recoverable reserves through improved recovery rate gas fields of Japan's largest and "Minami Nagaoka Gas Field" The '20 extended pic.twitter.com/u28yaz9gfh more condensate production of 3100 barrels of gas and 1.23 million cubic feet Nissan (light oil) from 1984 in the extension of the production period and increase Minami Nagaoka gas field, collected http://www.inpex.co.jp/news/pdf/2014/ than the atmospheric depth of 5,000 meters from about 4,000 underground gas fields of Japan's largest INPEX held 20140919.pdf ... Of recoverable reserves through improved recovery rate gas fields in the country's largest "Minami Nagaoka Gas Field" And increase the extension of the production period (inform) INPEX Corporation (hereinafter, the Company), we are working on the development and production business, which is the gas field in the country's largest "Minami Nagaoka Gas Field" as (Operator) operations principal. For the same gas field, to start the production and condensate natural gas (especially light crude oil) than in 1984, we have stable production over 30 years now, but this time, improvement of the recovery rate of the gas field we've decided that a main purpose the extension of production period and the accompanying increase in recoverable reserves by, to undertake facility expansion of Koshiji Koshijihara original plant that is doing the refining and processing of natural gas (※) , I will inform you. Facilities to improve the gas delivery capacity of the well, such as separator and (※) booster It is a gas field of the nation's largest located in the inland of 10 kilometers south-west of Nagaoka, Niigata Prefecture, Minami Nagaoka gas field, producing a condensate of about 3,100 barrels per day of natural gas and about 123 million scf per day get off. The 20 further from the current assumptions also for the production period to improve the recovery rate of the gas fields by equipment enhancement of Koshijihara plant to undertake this time, recoverable reserves of natural gas, crude oil and condensate, and also increased by approximately 20% it is extended about a little less than a year, to contribute to the gas supply stable and our efficient use and effective of valuable domestic energy resources is expected. Natural gas produced from the Minami-Nagaoka gas field, refining and processing at Oyazawa your Yazawa plant and Koshijihara plant It is, total length about spread to Kantokoshin'etsu held by the Company It has been supplied to customers through the natural gas pipeline network of 1,400 km. The Company, in order to cope with domestic natural gas demand that strong growth is expected in the future, in addition to new and enhancement of core pipeline, along the "INPEX medium and long-term vision", our company developed and manufactured overseas we are working to establish ties organically infrastructure of domestic natural gas business and the LNG business of "gas supply chain." So as to promote the effective use of further domestic energy resources, you can use with peace of mind the natural gas environmentally friendly to everyone more over a long period of time, we will continue to strive. Or more ========================= 世界最大日立ＬＮＧタンクの約1600㌧の屋根を５時間かけて持ち上げた ＬＮＧタンクの底部で組み上げた屋根を、空気の圧力で押し上げる工事（エアレイ­ジング）が行われた Lifted over 5 hours of roof about 1600㌧ the world's largest Hitachi LNG tank Was performed (air lasing) Construction boost pressure of the air, the roof is assembled at the bottom of the LNG tank... The 15th (not / equivalent) Fifth Pier Port of Hitachi, Ibaraki, Minato-ku, Tokyo Gas was published in the press Hitachi LNG under construction in (Hitachi City Tome-machi) and (liquefied natural gas) base. Has been performed (air Raging) construction over about four and a half hours from 8:00, by pushing up with the pressure of the air, the roof was assembled at the bottom of the LNG tank this day. It is aimed at running of March 2016 in the company. LNG tank about 86m ㍍ diameter, about 59m ㍍ height. In 230 000 liters ㌔㍑ that the world's largest as aboveground tank, storage capacity can be supplied to city gas equivalent to about 340 000 hotels of annual usage of household. 180,000 liters ㌔㍑ in aboveground, the largest, was 250,000 liters ㌔㍑ is of the type in which the underground until now. The roof is about 1600 tons ㌧ weight. Is fed from the air blower, and is pushed up to a height of about 38m ㍍ over 4 and a half hours. According to the company, raised roof construction of the LNG tank by the air Raging is the first time in the prefecture. Has three factories in the Tokyo Bay in the company, the base is four places first. It will strive to strengthen supply in South North Kanto and Tohoku in the establishment of the base, there is also the aim of hedging against disasters such as capital Earthquake. And seawalls of 8m ㍍ above sea level, etc. hit the pilings to bedrock underground 60m ㍍ the structure, the base is also to strengthen the preparedness for earthquake and tsunami. Construction began on July 12, 60% has been completed. In addition to the LNG tank, I will develop a large pier and dedicated LPG vessels and tanks (50,000 liters ㌔㍑). Pipeline connecting the existing pipeline of Tochigi Prefecture Moka and the same base total project cost - including the cost of laying "Ibaraki Tochigi trunk", is about 120 billion yen. 東京ガスは15日、茨城港日立港区の第５埠頭（ふ／とう）（日立市留町）に建設中の日­立ＬＮＧ（液化天然ガス）基地を報道陣に公開した。この日は午前８時から約４時間半掛­けて、ＬＮＧタンクの底部で組み上げた屋根を、空気の圧力で押し上げる工事（エアレイ­ジング）が行われた。同社では２０１６年３月の稼働を目指している。 　ＬＮＧタンクは直径約86㍍、高さ約59㍍。貯蔵能力は地上式タンクとして世界最大と­なる23万㌔㍑で、一般家庭の年間使用量の約34万軒に相当する都市ガスを供給できる­。これまで最大のものは、地上式で18万㌔㍑、地下に埋設するタイプでは25万㌔㍑だ­った。 　屋根は重さ約１６００㌧。送風機から空気を送り込み、４時間半掛けて約38㍍の高さま­で押し上げられた。同社によると、エアレイジングによるＬＮＧタンクの屋根上げ施工は­県内では初めて。 　同社では東京湾岸に３工場を有し、同基地は４カ所目。同基地の新設で北関東や南東北で­の供給力強化を図るとともに、首都直下地震など災害に対するリスクヘッジの狙いもある­。同基地も海抜８㍍の防潮堤と、構造物には地下60㍍の岩盤までくいを打つなど、津波­や地震への備えを強化している。 　工事は12年７月に着手し、６割が完了している。ＬＮＧタンクのほか、ＬＰＧタンク（­５万㌔㍑）や専用船の大型桟橋などを整備する。総事業費は同基地と栃木県真岡市の既存­パイプラインを結ぶパイプライン「茨城―栃木幹線」の敷設費も含め、約１２００億円と­なっている。 6-10-1 Roppongi Minato-ku, Tokyo www.robuchon.com =============== Unnecessary litigation scaring foreign investors By Zafar BhuttaPublished: July 27, 2014 US authorities took up the Mashal LNG case with the Pakistan government and asked it to come up with sustainable policies in order to protect the interest of investors. PHOTO: FILE ISLAMABAD: Foreign investors, discouraged by sometimes unnecessary litigation, are gradually losing interest in Pakistan, putting future capital flows into the country at stake. To avert the trend and woo investors, the government needs to mull over establishing audit or corporate courts in order to swiftly address the issues faced by local and foreign companies. Many international oil and gas companies have pulled out by winding up their operation in the wake of dispute with the government over different issues. Most of them are fighting tax cases in courts. The country has lost an opportunity to bring cheaper liquefied natural gas (LNG) supplies at $11 per million British thermal units (mmbtu) under the Mashal project while in copper and gold mining Tethyan Copper Company (TCC) has approached an international court. In the area of liquefied petroleum gas (LPG), Progas filed a case in the international court, claiming damages of $500 million and blaming its losses on a shift in government’s policy. In this scenario, experts suggest the government should dissolve the National Accountability Bureau (NAB) and strengthen the Auditor General of Pakistan in matters pertaining to investigation into business deals. The time is ripe to set up audit and banking courts so that the auditor general could pursue cases as NAB has been used and influenced by different governments for victimisation. Present courts have no expertise in dealing with business disputes as happened in the case of Mashal LNG project where the apex court asked the Ministry of Petroleum and Natural Resources to take it up for reconsideration before the Economic Coordination Committee (ECC) of the cabinet. In a case relating to a scam in the Oil and Gas Regulatory Authority (Ogra), NAB was coming up with different stories as initially it claimed a Rs82-billion scandal in the decision on increasing the unaccounted-for-gas (UFG) ceiling from 5% to 7%. However, in a fresh reference, it said the size of the scam was Rs26 billion, leading people to raise questions over the probe conducted by the bureau. It also filed two different investigation reports which were challenged in court. In the first report, which took two and a half years, there was no allegation on a big brokerage house. However, in the second report which took only a few days, its name was included while some big names were removed. This came despite the fact that the Securities and Exchange Commission of Pakistan ruled out in May 2013 any insider trading by stock brokers in shares of gas companies and a report in this regard was presented to the policy board. However, the report was later dumped. Investor concerns Some major foreign investors like the US and UK also questioned the legal system in Pakistan, in particular they objected to court cases against foreign firms in the Mashal LNG project. In their view, things like these send bad signals to foreign investors. Officials say the US authorities took up the Mashal case with the Pakistan government and asked it to come up with sustainable policies in order to protect the interest of investors. With the Mashal episode in investors’ minds, the previous government conducted roadshows in an effort to attract investors to bid for hydrocarbon exploration licences, but no new foreign company expressed interest in the auction of exploration blocks held in March 2013. International donors are also concerned about court cases. Top officials of the Asian Development Bank once told journalists that they were against the setting up of rental power plants, but the government should have honoured the agreements once they were made with the investors. The investors are already shy of making investment in the country over law and order concerns and to encourage them the government should dissolve NAB, strengthen the auditor general and establish audit or corporate courts. Published in The Express Tribune, July 28th, 2014. Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

COLUMN-Extreme project risk still holds back GTL: John Kemp

COLUMN-Extreme project risk still holds back GTL: John Kemp Mon, Nov 26 08:28 AM EST By John Kemp LONDON, Nov 26 (Reuters) - Plentiful and cheap supplies of natural gas, coupled with near-record prices for diesel and gasoline, provide a seemingly ideal environment for projects that convert natural gas into liquid transportation fuels. Yet most gas producers have hesitated to commit to new projects. Gas-to-liquids (GTL) beats other options like pipelines, liquefied natural gas (LNG) and compressed natural gas (CNG) for smaller gas deposits stranded thousands of kilometres from consuming markets. GTL plants are the most attractive way to realise the value in natural gas when oil prices are above $60 per barrel and gas prices are below $8 per million British thermal units, according to the 2012 "Global Energy Assessment", a landmark study compiled by the International Institute for Applied Systems Analysis. Four commercial GTL plants have become operational over the last 20 years: Mossel Bay in South Africa (1992), Bintulu in Malaysia (1993), Oryx at in Qatar (2007) and Pearl also in Qatar (2011-14). Combined capacity will be almost 225,000 barrels per day once Shell's Pearl project is fully operational (mostly diesel with smaller quantities of naphtha, lubricants and waxes). South Africa's Sasol (Mossel Bay and Oryx) and Royal Dutch Shell (Bintulu and Pearl) dominate the market, though other companies including BP, Chevron and Exxon have proposed projects or built demonstration facilities over the last decade. PROJECT GRAVEYARD Shell is currently expanding Pearl and Sasol is working with Chevron and the Nigerian National Petroleum Corporation to finish a GTL plant on the Escravos River in Nigeria. Escravos, which is a copy of Oryx, will convert about 8.5 million cubic metres per day of gas, currently flared, into 22,000 barrels per day of diesel and 11,000 barrels of naphtha. Both Shell and Sasol are reportedly considering projects on the coast of Louisiana in the United States. Sasol has plans to expand its production in South Africa and to build new plants in Uzbekistan and Canada. But even the two market leaders have hesitated to make firm commitments to new projects. Other major oil and gas producers have either avoided GTL altogether, or abandoned projects early. Exxon Mobil, Conoco and Trinidad have all cancelled projects in the last decade. BP produced 300 barrels per day of synthetic crude oil at a test facility between 2002 and 2009 but has not chosen to build a full-scale plant. TANTALISING ECONOMICS The case for a big expansion of GTL production appears compelling. Nearly 40 percent of the world's natural gas reserves are too far from consuming centres to be economically delivered via pipelines: GTL, LNG or CNG may be the only way to exploit them. GTL plants can unlock value by converting plentiful and cheap gas into scarce and valuable liquids. GTL yields lots of diesel (70 percent) rather than gasoline (25 percent), which could help bridge the worldwide shortage of middle distillates. GTL burns cleanly (it contains almost zero sulphur) and engine performance is better than for diesel from a conventional refinery (GTL diesel has a cetane number of 70 compared with 40 for refinery output). It also avoids the expense of fitting and operating energy-intensive hydro-desulphurisation units to conventional refineries. Together with LNG, GTL is the only way to reduce wasteful venting and flaring of stranded natural gas from oil wells in countries like Nigeria, Russia, Iran and Iraq. GTL plants are currently about 60-65 percent energy efficient. Their carbon efficiency is 75-80 percent. But projected improvements over the next decade could push energy efficiency over 70 percent, and carbon efficiency to 90 percent, comparable to conventional refining. AWESOME OVERRUNS Escalating costs have done much to undermine GTL. The technology is relatively mature. But many developers have opted for very large-scale plants in a bid to maximise economies of scale. GTL plants have had to compete for scarce engineering talent and raw materials such as high-strength corrosion resistant steels with the enormous number of LNG projects launched over the last ten years. The result has been enormous pressure on the relatively scarce engineering companies and suppliers capable of delivering advanced GTL plants on this sort of scale. In much-cited 2005 report, Professor Michael Economides of the University of Houston, put capital costs for a 65,000 barrel per day GTL plant at about $25,000 per barrel per day ("The Economics of Gas to Liquids Compared to Liquefied Natural Gas"). But following cost overruns, Shell's Pearl project ended up costing $18 billion, or about $110,000 per barrel per day for a 140,000 barrel per day plant. The Sasol-Chevron Escravos project has seen even worse cost inflation, and will likely end up costing at least $180,000 per barrel per day for 33,000 barrel per day of output. "Construction delays are chronic. Costs escalate as the giant projects create their own economic weather for engineering, labour, steel, shipping and other services," explains Arctic Gas, which coordinates gas transport projects in Alaska for the U.S. federal government ("Can gas to liquids technology get traction?" June 2012). LARGE AND LUMBERING Escalating costs are only one aspect of a wider issue. "The challenge for gas to liquid technology is not high cost, it is high risk," according to the U.S. Department of Energy's Advanced Research Projects Agency (ARPA-E). GTL projects have to cope with multiple risks simultaneously: price changes in both the feedstock and product markets, construction costs, cost of catalyst, and how big a plant to build. ARPA-E found the biggest risk was not the cost of gas, or even construction, but the realised price for the products when the project comes onstream (which explains why Pearl has been successful despite being wildly over-budget). It takes so long to develop a large-scale GTL plant there is no guarantee the configuration of gas and diesel prices which underpinned the original investment decision will still prevail when it eventually enters into service. "Progress has been stymied by the astronomical cost of building GTL plants, and the career risk facing chief executives who undertake such investments, as well as by oil prices that have swung between rock bottom and sky high," Arctic Gas observed. ARPA-E highlights the tremendous swing in oil prices from under $40 per barrel to more than $110 between 2000 and 2011, the typical timeframe for developing and building a GTL project. Long delays and high costs give rise to enormous market-timing risks ("Gas to liquid technology" February 2012). SMALL IS BEAUTIFUL The solution may be to think smaller. Process engineers generally prefer bigger plants because costs go up in line with the surface area while revenues go up faster in line with volume. The Sasol-Chevron GTL reactor vessel is enormous (see picture here:). In Shell's two 1200-tonne reactor vessels at Pearl "the surface of the cobalt catalyst is so vast that if it were spread out horizontally it would encompass an area almost 18 times greater than Qatar itself," Arctic Gas says. Smaller scale plants would be quicker to build, more responsive to changing market conditions, and a lot less risky. Building lots of small plants rather than a few big ones would also maximise the opportunity to reduce costs through learning effects. WorldGTL and CompactGTL are already developing small-scale modular systems for offshore platforms and associated gas production. Petrobras is piloting a micro-reactor based GTL system developed by CompactGTL for some of its offshore oil installations. If GTL is ever to contribute a significant fraction of diesel demand, developers will have to be convinced the divergence of gas and oil prices will be sustained in the long-term, and find ways to manage project risk more effectively. In the meantime, the brightest outlook may be for smaller-scale plants that can be developed more quickly with less risk. ================ BG Group is a rapidly growing global energy business and a world leader in natural gas. With operations in more than 20 countries over five continents, we’re developing some of the most exciting projects in the energy industry today. QGC, a BG Group business, is leading the way in the Australian Coal Bed Methane (otherwise known as Coal Seam Gas) exploration and production industry and is currently establishing the Queensland Curtis LNG (QCLNG) Project. Date published: 18 Jul 2012 Key Benefits The QCLNG Project is helping to diversify the Queensland economy, generate new jobs and rejuvenate regional towns and communities. Jobs and opportunities QCLNG is creating an average of 5000 jobs during construction and will employ around 1000 permanent staff for operations. Nearing the peak of construction, our total work force now stands at more than 7300, with about 1600 staff and contractors working directly for QGC and more than 5700 people engaged by our major contractors. Investment and growth QCLNG, one of Australia's largest capital infrastructure projects, will generate significant economic and environmental benefits for Queensland and Australia. In the 10 years to 2021, it is estimated that QCLNG will boost the Queensland economy by up to $32 billion. The Darling Downs region's economy will rise by $14 billion and the Fitzroy region's economy will be lifted $13.4 billion. It's good for Queensland Other benefits include: •$1 billion a year in royalties and taxes for the Queensland and Australian Governments. •A new industry for Gladstone to complement its position as one of Australia's leading industrial centres for coal, alumina and cement production. •New gas extraction and transportation infrastructure, offering greater opportunities for gas producers and increased choice for consumers. ...and good for the world At a time of rising energy demand, yet concern about changes to the world's climate, coal seam gas offers a pathway to a cleaner energy future. Gas produces about 20% less carbon dioxide emissions than oil and up to 70% less greenhouse gas emissions than coal when burnt to create the same amount of electricity. Learn more. Investing in communities QCLNG was the first resources project in Queensland to have a social impact management plan. The plan, which involves commitments of about $150 million by 2014, is part of QGC's strategy to maximise project benefits in the communities in which we operate. It is aimed at addressing potential impacts across the project, including health and safety, local employment and training, economic development, social infrastructure and housing. Learn more. Supporting local industry We support regional towns and businesses by using local contractors and suppliers wherever possible. About 60% of the $8 billion invested in the first two years of the project went to Queensland companies. About 50% of capital expenditure on the QCLNG Project until 2014 will be spent in Australia. About 80% of operating expenditure will be spent in the country from 2014. Learn more. Upgrading roads infrastructure QGC has committed about $70 million to state and local road projects to manage the impacts of transport associated with QCLNG. A contribution of about $40 million was agreed with the Queensland Department of Transport and Main Roads in July 2012 to mitigate impacts on state roads over the life of the project. About $30 million has been committed to local and regional council. Learn more. Water treatment and use We are investing more than $1 billion to treat coal seam water produced by gas extraction. The water will be treated using state-of-the-art reverse osmosis technology for use by agricultural and industrial customers. It will also supplement water supplies for the town of Chinchilla. Learn more. Did you know? The gas industry in Queensland is expected to contribute $516 billion to Australia's total economy between 2015 and 2035 [1]. -------------------------------------------------------------------------------- [1] This means new jobs - about 20,000 full-time equivalent jobs each year by 2035. Queensland's income alone is expected to rise $342 billion, an average of $28,300 a person, thanks to coal seam gas. Source: Australian Petroleum Production & Exploration Association. ================ QGC is a leading Australian coal seam gas explorer and producer. QGC is establishing one of Australia’s largest capital infrastructure projects to turn our world-class reserves of coal seam gas into liquefied natural gas (LNG). Queensland Curtis LNG, a priority project for QGC, involves expanding our exploration and development in southern and central Queensland and transporting gas via a 380km buried pipeline to Curtis Island near Gladstone, where it will be liquefied. QGC operates the gas-fired Condamine Power Station, the world’s first combined-cycle power station to run entirely on coal seam gas. =================== Santos Indonesia Wortel gas field to start this month Fri, Jan 06 03:02 AM EST Uploaded by AlJazeeraEnglish on Jan 26, 2012 Religious tensions in Indonesia have heated up once again after calls by some Sunni Muslim religious leaders to ban Shia Islam led to attacks on a religious school and the homes of the Shia community on Madura island in East Java. Feeling their human-rights have been violated, the Shia population of Madura have asked for protection from Jakarta after Sunni leaders tried to persuade the Shias to abandon their faith or face further attacks. So far the government has remained silent, seeing the attack in East Java as a local conflict. Al Jazeera's Step Vaessen reports from East Java. ========= JAKARTA, Jan 6 (Reuters) - Australian energy firm Santos Pty Ltd's Wortel natural gas field off Indonesia's shia dominated Madura island is set to begin production by the end the month, Indonesia oil and gas regulator BPMigas said on Friday. The field in the offshore Sampang Block will produce 50 million standard cubic feet per day (MMSCFD) of gas for domestic consumption, said BPMigas project deputy Hardiono. Sixty percent of the field's production will be supplied to private electricity company Indonesia Power while the rest will be bought by regional government-controlled companies. Indonesia, the world's third-largest exporter of liquefied natural gas, has been struggling to keep up with rapidly increasing domestic gas demand. The additional supply from Wortel field will ramp up Santos' total production off Madura island to 210 MMSCFD. Santos also produces 110 MMSCFD from its Maleo field and 50 MMSCFD from its Oyong field, Hardiono said. BPMigas also said that the rig maintainance in Maleo field in December 2011 was successfully completed without shutting down the facility. Maleo field has been supplying gas to state gas distributor Perusahaan Gas Negara (PGN) and Oyong fuel to Grati power plant operated by state electricity company PT Perusahaan Listrik Negara (PLN). In November, PGN agreed to more than double the price it pays for gas from Santos to $5.00 per million British thermal units(mmBtu), up from $2.14 per mmBtu. (Reporting By Reza Thaher; Editing by Rebekah Kebede and Sugita Katyal) === The Wahhabi War On Indonesia’s Shiites – Analysis – by Rossie Indira and Andre Vltchek By: FPIF December 6, 2012 Indonesia’s Shi’a minority is under heavy attack. Men, women, and children have been assaulted, schools damaged, and villages burned to the ground. Many have been killed. It is becoming increasingly clear that Saudi Arabia’s intolerant brand of Wahhabi Sunni Islam—propagated farand wide by Saudi oil money—is behind most of assaults. Naila Zakiyah, a lecturer at a Shi’a school for girls in the city of Bangil, East Java, recently explained to us: “In light of recent events, we are naturally worried about the safety of our students… We feel discriminated against. Before this year’s Ramadan, the Sunni mosque across the street broadcasted their sermon twice a week. They had their loudspeakers directed towards our school. They were shouting that Shi’a teaching is misguided, and that spilling our blood ishalal. It is said that those who are attacking us are being funded by money from Saudi Arabia. In 2007, for example, 500 people demonstrated in front of our boarding school; the Saudis gave each person $2.” When we visited the neighboring mosque, our hosts showed us anti-Shi’a pamphlets and said that they couldn’t talk to their Shi’a neighbors “in a subtle way anymore.” They added, “If they don’t want to convert, then we have to use violence. In our opinion, they are kafir. We will not be at peace with them until we die, even if our lives are at stake. They have already insulted Islam! If the police do not take action against the Shi’a, we will resort to violence.” And violence they use. In late December 2011, a mob of over 500 Sunnis drove 300 Shiites from their houses in the village of Nangkernang, Madura Island. Countless dwellings, including a boarding school and a place of worship, were destroyed. As is common in Indonesia, local authorities sided with the attackers. Only one person was charged for the attack on the village and sentenced to a symbolic three months in prison. Around the same time, local Shi’a religious leader Tajul Muluk was charged with blasphemy and sentenced to two years in prison, despite repeated protests from Amnesty International and other international human rights organizations. After the attack, some villagers cautiously returned, only to face even more devastating terror few months later. On August 26, 2012 around 30 Shi’ites were traveling from Nangkernang village when they were accosted by a Sunni mob armed with swords and machetes. According to Indonesian press, two people were murdered as they attempted to defend women and children. When we investigated, the villagers told us that only one person had been killed but at least five had been wounded. Moreover, they said, members of the mob had taken some Shi’a children away from their parents. The mob also set fire to several homes, including one belonging to Tajul Muluk. We visited the village in October, defying an explicit prohibition by the police force stationed in the area. After slipping through the rice fields in the middle of the night, we finally managed to meet representatives of the local Shi’a community. “Now we are afraid to say or to show that we are Shi’ites,” said one. “Here, two communities are living side by side. Not all attackers came from the outside; some were from our own village.” After the onslaught, more than 170 people left central Madura for a refugee camp in the city of Sampang. Even this facility—a converted covered tennis stadium—is out of reach for most independent journalists, and it took great effort to negotiate our entry. Refugees were clearly in despair. They all wanted to return home, but the government insisted that they would be “relocated” instead. Once again the Indonesian government was more interested in appeasing a cabal of sectarian aggressors than in pushing for justice. Suryadharma Ali, Indonesia’s minister of religious affairs, has left little doubt about his sympathies. “Converting Shiite Muslims to the Sunni Islam followed by most Indonesians,” he declared, “would be the best way to prevent violent outbreaks.” The Essence Of Domination At the end of November, the desperate, disheartened, and hungry refugees in Sampang sent an envoy to the Indonesian House of Representatives. They demanded that they be allowed to return home. They had their back against the wall, as the local government had announced it would stop supplying them with food and water. Instead of sympathy and support, the envoy had insults thrown in his face. According to theJakarta Post, one lawmaker “indulged in ethnic stereotyping, attributing the violence that befell the Shia to their heritage as coarse Maduran fishermen,” adding that Indonesia’s Shi’ites “must learn to adapt to the norm.” Another legislator expressed his suspicion that “the Shiites had created their own problems themselves.” We contacted our colleagues from the NGO Kontras, which deals with displaced and disappeared Indonesians, and asked them for a comment. “It is very sad to see that only a few legislators attended the meeting. I am afraid that they are not serious in defending the minorities here,” said Kontras coordinator Haris Azhar. “In my opinion, the essence of domination is when the fate of minorities is determined by the majority. They forget that there are rights that can’t be contested.” The same day we called the camp in Sampang and spoke to one of our contacts there, Nur Kholis. He sounded depressed. “We feel betrayed,” he said. “The government still wants to relocate us – move us somewhere where we don’t belong. We just want to go home.” Collusion Across The Seas This is the latest chapter of gross discrimination against minorities in Indonesia. Since 1965, Indonesian authorities have committed at least three massacres that could be considered genocides. Between 1 and 3 million people—mainly leftists and members of the country’s Chinese minority—died during and after the 1965 military coup. Indonesian forces also killed or starved around 30 percent of inhabitants of East Timor. And at least 120,000 people have been killed in Papua in a conflict that continues to fester. Discrimination against Indonesia’s many ethnic and religious minorities did not end after Suharto stepped down in 1998. Since then, there have been brutal and often deadly attacks against “liberal” Muslims, Muslims from the Ahmadiyah sect, and of course against Shi’ites. There have been countless other attacks against Christians, members of indigenous traditions, and more recently Hindus as well. Are these latest attacks homegrown? That is highly doubtful. Indonesian decision makers since 1965—military, economical, political, and religious—have long been known to collaborate with foreign powers and interests. The attacks against Shi’ites and other religious minorities in Indonesia mirror those happening in Saudi Arabia, Bahrain, and other parts of the Muslim world closely allied to the West. “There are many madrassas in Indonesia that have been funded by money from Saudi Arabia,” says Ali Fauzi, a younger brother of one of the terrorists responsible for the bombing in on Bali in 2002. “In exchange they are expected to promote the Saudi brand of Islam – Wahhabism. They are expected to oppose Shi’a belief and even to attack Shi’ites, as the message coming from Saudi Arabia is that Shi’a teaching is heretical.” Andre Vltchek is a novelist, filmmaker, and investigative journalist. He covered wars and conflicts in dozens of countries. His book on Western imperialism in South Pacific is called Oceania. His provocative book about post-Suharto Indonesia and the market-fundamentalist model is called Indonesia – The Archipelago of Fear (Pluto). After living for many years in Latin America and Oceania, Vltchek presently resides and works in East Asia and Africa. He can be reached through his website. Rossie Indira is an independent writer, architect, and consultant. Her latest book Surat Dari Bude Ocie is about her travels to Latin American countries. With Andre Vltchek, she cowrote Exile, a book of conversations with Pramoedya Ananta Toer. She was the production manager and translator of the documentary film Terlena–Breaking of a Nation. Rossie lives in Indonesia and can be reached through her website. Source: http://www.eurasiareview.com/06122012-the-wahhabi-war-on-indonesias-shiites-analysis/ ============= Iraq seeks around 1 mln tons more gasoil for 2013 Tuesday, 11 December 2012 Iraq’s State Oil Marketing Company seeking nearly 1 million tons of gasoil to supply power stations in 2013. (AFP) By Reuters Dubai-UAE Iraq’s State Oil Marketing Company (SOMO) is seeking nearly 1 million tons of gasoil on behalf of the country’s electricity ministry to supply power stations in 2013, a tender document showed on Tuesday. SOMO is tendering for 1,260 metric tons a day of gasoil to be delivered Feb. 1-March 31, or a total of 74,340 tons over the two months, with another 3,360 tons a day required from April through to the end of 2013, amounting to 924,000 tons. The seller will have to deliver the fuel to the Iraqi port of Basra and then transport it by road to Iraqi power stations. Submission of bids begins on Dec. 13 and the tender closes on Dec. 26, SOMO said. In November, SOMO finalized a term deal to buy up to 1.097 million tons of gasoil for delivery next year from Swiss trader Vitol and oil major BP, according to traders. ============== An offer you cannot refuse: Iran offers crude supply on deferred payment By Zafar Bhutta Published: December 18, 2012 Iranian oil has a bigger component of furnace oil and no Pakistani refinery can process 100% Iranian crude oil. Thus, a new Iran-sponsored refinery may be placed in Gwadar to support the deal. PHOTO : FILE ISLAMABAD: Iran has given Pakistan an offer that looks like it is too good to refuse. Tehran offered 100,000 barrels per day of crude supply to fuel-starved Pakistan on a long term deferred payment. This offer comes amid US efforts to block Iran’s oil exports to the world to build up economic pressure in an attempt to curb Tehran’s ‘going nuclear’ ambitions. Sources told The Express Tribune that the Iranian government made the offer during the visit of the petroleum adviser Dr Asim Hussain to Tehran earlier this month. According to sources, Iran had also offered to enhance supply if the two sides moved ahead on the proposed oil exports plan. The crude oil imported will be processed by Pakistani refineries. “Iran is losing half of its oil revenues because of international sanctions imposed over its disputed nuclear programme,” AFP quoted Iran Economy Minister Shamseddin Hosseini as saying on Monday. Hosseini put down the loss to difficulties in repatriating oil money. According to the International Energy Agency, Iranian exports in November were estimated at 1.3 million barrels per day, down from nearly 2.3 million last year. The US is making efforts to block Iran’s oil exports as it estimates that crude sales provide about half of Iranian government revenues and that oil products make up nearly 80% of the country’s total exports. US is already working to convince the Government of Pakistan to shelve the Iran-Pakistan (IP) gas pipeline project, designed to import 750 million cubic feet per day (mmcfd) of gas from Iran to meet its domestic requirements. The recent Iranian offer may further anger the US and pressure may build upon Pakistan to refuse. “At present, Pakistan is facing problems in repayment of the International Monetary Fund (IMF) Stand-By Arrangement $7 billion loan and long term oil credit facility may ease pressure on foreign exchange reserves,” a senior government official said, adding that however, Pakistan many not be able to materialise the offer due to payments issues. Pakistan was importing 73 megawatts (MW) to meet the requirements of Gwadar in Balochistan but payment issues were hampering these imports. Previously, Tehran supplied 45,000 barrels of crude oil to Pakistan on a three-month deferred payment plan until January 2011. However, the United Nations imposed sanctions halted imports due to difficulties in opening letters of credit from global banks. Since then, Iranian oil is largely smuggled into Pakistan. “So, the payment issue may again halt the oil supplies if offer materialises,” official said. An official said that Pakistan Refinery Limited (PRL) was designed in 1962 to process Iranian oil. “But consumption of Iranian oil in Pakistan is very low and therefore PRL has made modifications,” he said, adding that no refinery in Pakistan can process 100% Iranian crude oil. “The oil pipeline between two countries may be feasible If Iran sets up a refinery in Pakistan,” he added. Sources said that petroleum adviser Hussain had also discussed a plan of establishing a Iran-sponsored refinery in Gwadar and laying an oil pipeline between two countries. “Under the plan, an oil pipeline is to be laid right up to the Gwadar Port, where a crude oil refinery will be set up. Pakistan and Iran may enter into a joint venture partnership to set up the refinery,” sources said. Iranian oil had more component of furnace oil and Pakistan furnace oil requirement had increased from three to four million tons in 2004-05 to nine million tons in the ongoing financial year. The production of furnace oil capacity of local refinery is up to 3.5 million tons annually. At present, the Pakistan State Oil (PSO) is a major importer of furnace oil to meet requirements of the power sector. “Pakistan may also meet furnace requirements by importing crude oil from Iran,” an industry source said, adding that Pakistan may save 20 cents per barrel as it will no longer have to bear the costs of transporting Iranian oil. Published in The Express Tribune, December 18th, 2012. ============== US GTL start-up could help Iraq cut gas-flaring if politics weren’t a factor By Tamsin Carlisle | February 11, 2014 12:01 AM Comments (1) Call me an Iraq skeptic, but when I learned last week of US plans to deploy mobile power generation technology to help Iraq eliminate large-scale natural gas flaring, my applause was distinctly one-handed. My initial thought: “Just how is that going to work in a country with a barely functional electricity transmission grid?”But never fear. If Plan A falls through, Washington may find the US private sector has already come up with Plan B in the form of economic,small-scale gas-to-liquids technology. Primus Green Energy is a Hillsborough, New Jersey, petroleum technology start-up that has developed proprietary technology to produce liquid fuels such as high-quality gasoline, diesel and jet fuel, as well as aromatic chemicals, from natural gas or biomass. Gas is the stuff Iraq now burns as waste from its major oil fields in volumes exceeding 1 Bcf/d due to lack of gas processing and delivery infrastructure. Primus predicts that products of its process will be cost-competitive with conventionally refined petroleum products, and won’t need subsidies. The company also says use of its fuels for transportation requires no engine modifications or changes to fuel delivery infrastructure. Given that international oil companies of the stature of ExxonMobil and Royal Dutch Shell have each spent billions of dollars developing and proving their own versions of commercial gas-to-liquids technology, are these anything more than empty claims? I was more than a little skeptical in January when I met Primus Vice President of New Business George Boyajian at the International Petroleum Technology Conference in Doha. Blog entry continues below… -------------------------------------------------------------------------------- Request a free trial of: Oilgram News Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more. -------------------------------------------------------------------------------- Boyajian told me that for $120-$130 million, Primus could build a commercial plant capable of producing about 2,000 b/d of a chosen fuel–say, 93-octane gasoline–at high purity and with high yields. Multiply that by 80, and one could theoretically achieve the output of Shell’s landmark Pearl GTL plant in Qatar–the world’s biggest–at less than half Pearl’s $19 billion price tag. It seemed too good to be true. Yet technology advancement has a habit of accelerating once someone has done the groundwork to prove the commerciality of an initial product or industrial process. In the back of my mind was another voice saying Primus should not be dismissed out of hand. Certainly, the technology startup has made a sufficiently compelling case for its technology to convince the US Patent and Trademark Office to allow its patent application covering “STG+” liquid fuel synthesis technology. Primus already has patents on various components of the technology, such as the recipes for coaxing its system to produce specific products by adjusting operating conditions and combinations of commercially available catalysts.

“STG+ is a new, proprietary thermochemical GTL process that fundamentally transforms the efficiency and economics of liquid fuel synthesis technologies,” Primus CEO Robert Johnsen said in a statement last week. “The allowance of this patent application validates the novelty of the technology we have developed and proven at scale in our research facilities and commercial demonstration plant,” he added. “It greatly strengthens our intellectual property portfolio, an important step as we look toward construction of our first commercial GTL plant.”

In October 2013, Primus commissioned a 100,000 gallon-per-year (6.5 b/d) demonstration plant at Hillsborough, a far stretch from its proposed 27.8 million gallons/year (roughly 1,800 b/d) commercial unit. Nonetheless, an independent engineers’ report found that catalyst performance and system economics in the demonstration plant exceeded expectations. Primus said it expected final issuance of its STG+ technology patent in March and to break ground on the commercial plant in 2014. Start-up is slated for early 2016. Boyajian said that because the STG+ process had fewer steps than the GTL processes currently in commercial use, and its economics had already been proven at small scale, he expected the larger plant also to be economically viable. He also said that while Primus had initially seen an opportunity in the US domestic market, as a result of the recent shale-gas boom, small-scale GTL could be an ideal interim technology for jurisdictions with stranded gas resources, gas in the ground but no infrastructure to get it to market. Part of Boyajian’s remit is to develop international markets for Primus’ technology. Among Asian states with significant undeveloped gas resources, Kazakhstan and semi-autonomous Iraqi Kurdistan had thus far expressed interest, he told Platts. The proof is in the pudding, and Primus says it is in financing discussions to bake puddings with potential strategic partners such as airlines and gasoline retailers. Its pudding recipes, meanwhile, are being funded by IC Green Energy, the renewable energy investment arm of Israel Corp., which is Israel’s largest holding company. Oh dear, perhaps Baghdad won’t welcome Plan B after all. Ed. Note–this posting has been revised to accurately reflect the estimated cost Primus puts on the cost of a new plant at $120-$130 million. Share this: All blog comments are moderated before being published. Comments Rohit at March 5, 2014 7:32 am Does the cost estimate include a) gas conditioning and b) storage/pipelines for the individual products, which could easily cost another $ 30 m or more. Reply ====================

The poor man’s fuel: Regulate the use of CNG, not just the price

By Khurram Baig Published: November 19, 2012 A Toyota Prado lines up with a Suzuki Mehran for a CNG refill. Consumers like these destroy the benefits of providing the cheap fuel as a means to lessen the poor man’s burden. PHOTO: FILE KARACHI: The merits of the idea can always be argued. There are supporters as well as opponents to the idea of switching to CNG. The efficacy of the idea however needs no argument. The switch to CNG to mitigate or to some extent lessen the economic burden of the masses has failed to bring about the desired results. I feel the bigger issue is about who actually ends up using CNG. There is the general perception that CNG is a poor man’s fuel and the shift from petrol was initiated to enable the lower income groups to benefit. However, while that may have happened in some cases, for the most part, the real beneficiaries of CNG, regardless of what price it is being sold at, are those who were never really less privileged or ‘poor’ to begin with. And this becomes quite obvious when one sees long lines of Corollas, Citys, Civics and other expensive cars, including fancy SUVs lined up to get CNG. I tried, I really did, but I could not come up with any economic rationale to classify these people as less privileged. In fact, the less privileged do not usually own cars. The less privileged do not use taxis and rickshaws. The less privileged either use motorcycles or public transport to get to work or go about their daily commute. And I think we can safely argue in today’s economic environment that anyone who can afford nothing more than a 800cc car also falls within the domain of middle or lower middle class. Motorcycles do not use CNG. And while transporters have made the shift from diesel to CNG in large numbers, fares have not been reduced to reflect this change. So we have established that the idea is probably flawed, based on the fact that it has not worked. That can be as a result of two things. One is that the idea was based on unsound economic principles to begin with, or the execution was flawed. I believe that in this case the idea was workable, and still is workable. It could have made a change, but the execution was pathetic. I cannot be clearer than that. But before I go into that, let’s take a second to figure out exactly how much one saves off CNG and if it really is worth the hassle, the conversion cost, and the increased engine maintenance cost. Let’s use some rounded off numbers and peg the price of Petrol at Rs100 and the price of CNG at 90, closer to where it was before the Supreme Court intervened to reduce prices. The reason I am using that as a peg is because current prices are interim, and they will in all likelihood be revised upwards based on the new formula being proposed by Ogra. On average – barring extreme exceptions – the daily mileage racked by most car owners is usually not more than 50 kilometres. So that means about 5-6 litres of petrol consumed, Rs500 to Rs600 spent. A car running on CNG, would travel the same distance using about 4-5 kilogrammes of CNG. This translates into Rs360 to Rs 450 spent on a daily basis. I have based this on the average consumption of a 1300cc car. This translates into daily savings of Rs150, monthly Rs4,500. Is this really meaningful for someone who can afford a Rs1.5 million car, or Rs2 million? And factor in the fact that the car owner invested in the CNG conversion kit and also pays more on the maintenance of the engine as a result. It really doesn’t make economic sense to me. Most of us can easily save more than this or even more by resorting to other means like saving on electricity consumption, driving less, carpooling, or buying a smaller car. But I guess this means a measure of self-discipline but that’s no fun is it? The government has to put its foot down to insist that the savings made by public transport owners – since the shift to CNG and LPG – be passed on to consumers. The mass-shift to CNG in private cars without any regulation which has resulted in the current shortage is also the government’s fault. They can still fix it. I believe any car with an engine capacity over 800cc should not be allowed to run on CNG. It should be restricted to mass public transport and not even prime movers. It certainly should not be allowed in Civics, Corollas, Citys and SUVs. If one can buy an expensive car, one probably is and should be willing to pay the cost of running it. If you can’t, then buy a smaller car! Published in The Express Tribune, November 19th, 2012. =============== Coal-powered energy – the best substitute By Faiza Hai / Creative: Faizan Dawood Published: November 19, 2012 According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. DESIGN: FAIZAN DAWOOD KARACHI: Since Pakistan came into being, people have been facing loadshedding due to shortage of power supply, with frequent outages affecting economy in many ways. Uncountable working hours have been lost, leading to an increase in poverty and economic loss of billions of rupees to the country. Surprisingly, it is happening despite the fact that only about 60% of the population has access to electricity. According to the World Energy Statistics 2011, published by the International Energy Agency (IEA), Pakistan’s per capita electricity consumption is one-sixth of the world average. World average per capita electricity consumption is 2,730 kilowatt hours (kwh) compared to Pakistan’s per capita electricity consumption of 451 kwh. According to the Pakistan Energy Year Book 2011, the country’s installed power generation capacity is 22,477 megawatts and demand is approximately the same. The country needs to redesign the electricity portfolio and substitute oil and gas with an abundantly available indigenous fuel source. It must develop indigenous energy resources to meet future electricity needs and can overcome energy crisis by utilising untapped coal reserves. Fortunately, Pakistan has a very inexpensive source to get energy through coal. Coal is economically viable and a long-term solution to balance the demand and supply chain of electricity in the country, which has the fifth largest coal deposits in the world. According to last estimates made in 2011, coal deposits in the country are up to 185 billion tons. The largest deposits are in Thar desert, which is about 850 trillion cubic feet spanning over 10,000 square kilometers, surprisingly more than the oil reserves in Saudi Arabia having a collective quantity of approximately 375 billion barrels. At present, 40.6% of world’s electricity is being generated from coal and it is the single largest contributor to world electricity generation. By looking at the electricity generation mix of the countries that are blessed with coal, it is evident that coal is the largest contributor. Countries like Poland, South Africa, China, India, Australia, Czech Republic, Kazakhstan, Germany, USA, UK, Turkey, Ukraine and Japan are generating 96%, 88%, 78%, 78%, 77%, 72%, 69.9%, 52.5%, 52%, 37%, 31.3%, 27.5% and 22.9% of electricity from coal respectively. In comparison, Pakistan generates only 2.27% of electricity through coal. However, coal reserves of only Thar can generate 20,000MW of electricity for the next 40 years without loadshedding and at a rate Rs4 less than the current cost of electricity production. The government has given the task to experts to enhance energy efficiency by focusing on coal and ensure large scale power generation through this resource. How coal produces electricity Technically, producing electricity through coal is a simple process. In most coal-fired plants, chunks of coal are crushed into fine powder and are fed into a combustion unit where they are burnt at a very high temperature. Following this, the burning coal is used to generate steam that is used to spin one or more turbines to generate electricity. However, during the process, sulfur dioxide and nitrous oxides are produced as well, which cause an increase in smog, ozone depletion and acid rain. Nitrous oxide is also a very powerful greenhouse gas. Even before power is produced, the transportation of coal also poses health risks due to coal dust and emissions from vehicles. Lastly, heavy metals from coalmine waste can seep into groundwater and rivers. Despite the negative aspect, the significance of coal is not easy to ignore. Recently, work on a 50MW Underground Coal Gasification (UGC) project has started, which is expected to cost Rs8.898 billion with foreign exchange component of Rs5.847 billion. It has been approved by the Executive Committee of National Economic Council (Ecnec). If successful, the project will encourage investment from leading international companies. At the International Coal Conference 2011, Pakistan had invited investors from around the world, encouraging them to pour money into coal power projects as the country initially requires $1.2 billion to build power generation infrastructure in Thar. Japan is keen to finance transmission lines from the Thar coalfield to the national grid and Chinese companies have expressed interest in developing coal-based power plants in Thar and Badin. The writer comments on economic and energy-related issues Published in The Express Tribune, November 19th, 2012. ===================== Sidra Humayun Umar One of our teachers is doing PhD in Bio-Chemistry. As part of his field work, he has been contracted by Dr Samar Mubarakmand for development of coal gas in Thar, for production of electricity. The care serves were found to be deep in water and extraction very difficult and costly. So as a step one they have successfully managed production no water gas which can be used by industrial units for their domestic production of electricity at almost no cost!!Later the coal gas can be used for the normal PPs. He is one of five scientists tasked with this project. And they have successfully achieved the task in less than half the time allotted.They were then asked by Dr Saman to make a presentation to the PM -Nawaz Sharif. This is what my teacher tells me;-They made the presentation to the PM and he praised them and said he had heard of their good work, and that we will be giving the Awam good news very soon. Thereafter he said you should stop this project and we will pay you manifold from what these people are giving you. Just saythat the project cannot proceed - - -!!My teacher says that they were briefed before the meeting that they should not ask any questions or raise objections. So they kept in stunned silence at the utterances of the PM. However one of their teama Miss Shiza spoke up and said that we are not doing this for you but for Pakistan, and you should not be talking like this - - -. The bold girl berated Nawaz openly, while he shrunk into his seat and did not say anything, and was looking glum!The next morning when Miss Shiza left her home in her car, she was fired upon!!! The message was clear.Then one of the advisers of PM sent them a message that they should abandon the project where it is. A similar project had been launched earlier which had failed. Now they will say that the second attempt b ythe country's scientists has failed and now we will invite some foreign firm. In the meantime electricity will be imported from abroad(India?). If you stop this project, you will be " weighed in notes".Earlier on one of PM's advisers had visited their work site in Thar and told them to ensure the project fails and "you will be compensated heavily" During their meeting with the PM, the latter had asked them to think seriously about what the "Musheer" had talked to them!My teacher is very upset. he says that as per their calculations the electricity could pe produced at a maximum of Rs 0.75 per unit. How much could they eat out of that??!However the up side is that Gen Wyne, Chairman, Joint Chiefs of Staff, has sent them a message through Dr Samar to carry their work and not to worry as "they will protect you".I thought I should let you know what is actually going on. This is no hearsay. Its my own teacher involved and I have questioned him extensively before writing this.Do let every one know. Do whatever we can. ==================

Forty countries at Int’l Oil, Gas and Petrochemical Exhibition

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The 16th International Oil, Gas, Petrochemical and Refining Exhibition came to a close in Tehran on Tuesday afternoon. During this five-day exhibition, more than 600 foreign companies from 40 countries across the world, in addition to a number of domestic activists in the domain of oil, gas, and petrochemical industry were in attendance.

The presence of companies from a number of countries, including China, South Korea, Germany, Britain, Italy, and France, alongside more than 900 domestic companies, active in oil and gas industry, turned this international oil and gas exhibition into a center for talks and interactions in the scene of oil industry, and in regard to provision of energy security.

A 35% growth in the presence of foreign and domestic companies in this exhibition once again proved the indifference of countries toward the sanctions imposed against Iran’s oil industry.

Iran possesses the 2nd largest natural gas reserves, worldwide, amounting to 33 trillion cubic meters of natural gas, while also possessing 155 billion barrels of oil, thereby holding a determining status in provision of energy, worldwide.

In the 70s, Iran only exported oil and imported the needed products. However, today, over 90% of Iran’s refineries are constructed by Iranian experts, and strategic products such as gasoline are produced in Iran based on the latest global standards.
Currently, almost 37% of Iran’s petrochemical products are exported to Far East and China; 25% are exported to Middle East; 11% to Europe; 18% to Indian Subcontinent; 7% to Southeastern Asia and Pacific region, and 1.2% are exported to Africa. These achievements have been made while the role of Islamic Republic of Iran throughout the global scene has been more effective despite US sanctions. Despite US destructive campaign, Iran is capable of playing a pivotal role in promotion of the security in transition of energy en route to Asia and Europe; given its clear advantages in regard to oil and natural gas reserves, and its advantageous geographical position.

In the view of economists, Iran’s comprehensive plans about the future of energy has raised numerous opportunities in the energy sector; while a part of these golden opportunities have been raised at the South Pars region, which is one of the global poles of energy resources

==

Shell gas deal gets initial OK, including exports
Iraq’s crude oil extraction also produces huge volumes of associated natural gas, half of which is currently burned off as a waste byproduct in flares like these, at the Rumaila oil field in Basra province. (ESSAM AL-SUDANI/AFP/Getty Images)
Iraq’s crude oil extraction also produces huge volumes of associated natural gas, half of which is currently burned off as a waste byproduct in flares like these, at the Rumaila oil field in Basra province. (ESSAM AL-SUDANI/AFP/Getty Images)
By Ben Lando and Staff of Iraq Oil Report
Published July 13, 2011

Iraq and partners Royal Dutch Shell and Mitsubishi agreed behind closed doors to a draft deal to form a joint venture company that will capture and process gas currently flared from three Basra oil fields and eventually export at least a portion of it.

There are many hurdles to be overcome, including whether Parliament will demand a say in the controversial deal.

Despite the obstacles over the past three years since negotiations began, there appears to be resolve to finalize a plan to end ...

==

Progress on two key oil laws
Deputy Prime Minister for Energy Affairs Hussain al-Shahristani (L) and Adnan Janabi (R), the chairman of Parliament's oil and energy committee, give a press conference in Baghdad. Shahristani's energy committee in the Cabinet is taking up the long-stalled hydrocarbon framework law, while Janabi's committee is pushing legislation that would reconstitute the Iraqi National Oil Company. (BEN VAN HEUVELEN/Iraq Oil Report)
By Ben Lando and Staff of Iraq Oil Report
Published July 1, 2011

Two laws that would dramatically alter the contentious landscape of Iraq's oil sector – and potentially de-politicize its operations – will be taken up by two committees next week.

Parliament's Oil and Energy Committee is scheduled to debate a law to reconstitute the Iraqi National Oil Company (INOC), and the Cabinet's Energy Committee – led by Hussain al-Shahristani, the ex-oil minister, current deputy prime minister for energy affairs, and key ally of Prime Minister Nouri al-Maliki �...

===

Iran’s demand for War compensations from Iraq shall escalate tension between both countries, al-Iraqiya Legislature says
8/1/2011 11:47 AM

BAGHDAD / Aswat al-Iraq: The Legislature of al-Iraqiya Coalition, led by Iyad Allawi, Zala Neftchy, has stated on Monday that Iran’s demand of compensations from Iraq due to their 1980-88 War “shall step up tension between both countries,” adding that “Iraq was supposed to demand such compensations from Iran, because the latter had started the war operations at that time.”



“The political tensions are escalating by Iran against Iraq, and instead of stopping its bombardment of Iraqi territories in Iraqi Kurdistan, it is demanding compensations for the 1980-88 War,” Neftchy told Aswat al-Iraq news agency.



“Unfortunately, we believe that the said demand would escalate and step-up tension in relations between both countries, at a time when Iraq is trying to settle its crisis with the Iranian side, through peaceful means,” she said.



Neftchy said that “Iraq, if fact, is the country that should demand compensations from Iran, because the latter had been the one that started the military operations at that time,” adding that the Iraqi Parliament “might discuss the said issue in its session today (Monday).”



Local media sources have carried reports, pointing out that the Iranian side was carrying talks to gain compensations for the War that erupted between Iraq and Iran in 1980-88.



The eight-year Iraq-Iran war had claimed the lives of hundreds of thousands of people from neighboring countries, along with larger numbers of injured people, as well as costing both countries losses that reached billions (b) of U.S.
dollars.


====

Chabahar to emerge as Iran petchem hub
Sun Aug 14, 2011 5:5AM GMT
National Iranian Petrochemical Company Planning Manager Ramezan Oladi
The National Iranian Petrochemical Company (NIPC) has announced that the southeastern port city of Chabahar will become the country's hub for petrochemical production.


NIPC Planning Manager Ramezan Oladi said on Saturday that the NIPC plans to construct the required infrastructures for the production of 15 million tons of different petrochemical products in Chabahar in the southeastern province of Sistan-Baluchestan, the official website of Iran's Oil Ministry, Shana, reported.

Oladi also added that about $20 billion of investment is needed in order to produce 15 million tons of petrochemicals in Chabahar.

The official further noted that about 20 million cubic meters of natural gas per day and 3.6 million tons of ethane per year are required as the feedstock for the production of this amount of petrochemicals.

He stated that the National Iranian Gas Company has signed a contract to extend Iran's seventh gas trunk line from Iranshahr to Chabahar to provide the natural gas feedstock.

Oladi went on to say that the needed ethane feedstock will be procured through a 24- to 28-inch pipeline from the South Pars gas field in Assaluyeh in the southern province of Bushehr to Chabahar, scheduled to be constructed in the next 36 months.

Earlier in August, NIPC Managing Director Abdolhossein Bayat said that Iranian petrochemical products worth about $14 billion would be exported by the end of the current Iranian calendar year, which ends on March 19, 2012.

===

Iran parliament to examine repeated pipeline explosions

07 Aug 2011 11:13

Source: reuters // Reuters

* Cause of Friday's oil pipeline blast still unclear

* Lawmaker says aging infrastructure, sabotage are both risks

TEHRAN, Aug 7 (Reuters) - Iran's parliament is to examine recent energy pipeline explosions to see to what extent sabotage or technical problems were to blame, a lawmaker said on Sunday, two days after an oil line blast which caused a jump in global crude prices.

"Since the start of the (Iranian) year, we have witnessed the emergence of incidents such as explosions and fires at domestic and export pipeline networks," Emad Hosseini, spokesman of parliament's energy committee, told the ISNA news agency.

"Certainly these incidents have not been all unintentional."

The cause of Friday's explosion, in Iran's oil rich southwestern Khuzestan province, has still not been determined. Officials said the line had been repaired by Sunday.

A news report that wrongly said the pipeline was the biggest in Iran caused a temporary spike in oil prices as traders feared possible militant action that could hurt output from the world's fifth biggest exporter.

Several armed groups hostile to the government are active in Iran, including Kurdish separatists in the northwest, Baluch militants in the southeast and some Arabs in the southwest.

"The cause of the outbreak of some problems at the pipeline network are operations by terrorist groups but others are unclear," Hosseini said.

"The issue of pipeline corrosion is a culprit in such incidents (as well)."

Iran's standoff with the West over its nuclear programme and the subsequent sanctions has deprived the Islamic state of foreign investment and technology to modernize the oil industry. (Writing by Hashem Kalantari; Editing by Mike Nesbit)

==============

Iran, China may sign new oil deal
Fri Nov 4, 2011 6:33PM GMT

Reddit

NIOC's Director General for International Affairs Mohsen Qamsari
National Iranian Oil Company director general for international affairs says Iran may sign a new contract with China to sell crude oil to the East Asian country.


Seyyed Mohsen Qamsari noted that Iran is currently exporting 400,000 barrels per day (bpd) of crude oil to China and the country's demand for crude oil will further increase by 2012.

“In addition [to China], Southeast Asian countries like Singapore and littoral states of the Persian Gulf are the most important markets for Iran's fuel oil,” Mehr News Agency quoted him as saying on Friday.

When asked about possible substitution of Iran's oil for Syria's in the Mediterranean region, the official stated that Syria is currently exporting a daily average of 150,000 bpd of crude oil.

“Since Syria's crude oil is heavier than Iran's crude, Iran cannot take Syria's place in oil markets,” Qamsari added.

He noted that Iran has received no requests from foreign companies for canceling oil purchase contracts, adding that the country's crude oil exports continue as usual.

Iran is OPEC's second largest oil producer and the fourth largest crude oil exporter.

The country holds the world's third-largest proven oil reserves and the second-largest natural gas reserves.

New onshore oil and gas fields were recently discovered in southern and western parts of Iran with reserves of 500,000 million oil barrels and five trillion cubic feet gas respectively.

================

‘Oil in new Iran field of high quality’

Sat, 19 May 2012 07:13:04 GMT

Iranian Oil Minister Rostam Qasemi says the crude in the newly-discovered oil reserves in Iran’s territorial waters in the Caspian Sea is among the most high-quality crude in the world.

“The oil discovered in Sardar-e Jangal field is of the best kinds of crude oil in the world,” Qasemi was quoted as saying in a Thursday report by ISNA.

The new oil reserves were discovered by the Amir Kabir semi-submersible drilling rig in the course of exploration operations on Sardar-e Jangal gas field in the deep waters of the Caspian Sea on May 10.

The Iranian oil minister added that the oil reserves of the field rank very high in terms of the API (the American Petroleum Institute gravity index).

The quality of crude oil is determined based on the API degree. Oil with an API gravity of between 40 and 45 commands the highest prices.

Stating that the oil in the field is not sour, Qasemi noted that further studies are required to determine the exact amount of the in-place reserves of the field.

Early estimates have put the field’s oil reserves at 8-10 billion barrels, though exploration activities are still underway.

Qasemi announced the discovery of the huge Caspian field, which was later dubbed Sardar-e Jangal, on December 11, 2011, saying that the field contains 50 trillion cubic feet of natural gas.

According to the officials of the National Iranian Oil Company, the new field is completely situated within Iran’s territorial waters in the Caspian Sea and is not shared with any neighboring country.

Iran is OPEC's second-largest oil producer after Saudi Arabia, and has 150.3 billion barrels of crude oil and 33.1 trillion cubic meters of natural gas, according to the latest official statistics.

The Persian Gulf country sits on the world's second-largest gas reserves after Russia. =============== EU sanctions strangle Iranian LPG exports to Asia Wed, Oct 31 08:40 AM EDT By Julia Payne and Meeyoung Cho LONDON/SEOUL (Reuters) - EU sanctions on Iran's natural gas have unintentionally also brought its exports of liquefied petroleum gas to a near halt, industry sources say, starving Tehran of yet more dollar revenue and threatening to push European winter fuel bills yet higher. LPG, which comprises propane and butane, comes mainly from oil rather than natural gas, but shippers and insurers are steering clear of Iranian supplies due to uncertainty over the scope of the new European Union sanctions. "It's a grey area if natural gas includes LPG or not," said one LPG trader. "Not many want to take a risk on that." Earlier this month the EU announced tighter restrictions on trade with Iran, adding to already comprehensive international sanctions aimed at forcing Tehran to halt its nuclear program. These included a ban on importing and transporting Iranian gas, as well as financing gas sales. Western nations suspect Iran is trying to develop atomic weapons, something that Tehran denies, but the gas curbs had appeared symbolic as Iran exports none to the EU. In reality, the measures announced by EU foreign policy chief Catherine Ashton are already strangling Iranian LPG exports to countries outside the bloc, notably South Korea. Officially, the gas sanctions became binding on EU governments from October 16 but technically they do not apply to companies until detailed legislation is prepared and issued. An EU source said this could happen in November. In the absence of hard and fast EU rules, Iran's LPG customers outside the EU are acting cautiously due to the uncertainty, with the result that shipments are drying up. Previous U.S. and EU measures slashed Iran's crude oil exports, hitting its hard currency earnings and contributing to a plunge in the rial's value. The International Energy Agency estimated its crude exports at 860,000 bpd in September, down from 2.2 million bpd at the end of 2011. Similar curbs on LPG will likewise hurt Tehran. Before the sanctions, Iran exported almost four million metric tons a year, worth over $4 billion at current market prices. After South Korea, Norwegian energy giant Statoil was the main buyer of Iranian LPG, industry sources said. Company spokesman Morten Eek said Statoil had taken Iranian LPG as repayment of debts owed by the National Iranian Oil Company (NIOC) for completed projects on the giant South Pars gas field and exploration on the Anaran and Khoramabad fields. "We receive the cargo at the LPG terminals in Iran and transport it by ship to markets outside Europe and the USA. Cargoes of LPG serve as down payment of NIOC's debt to us," he said. "We have informed the Norwegian and United States authorities on this and we will continue the dialogue to ensure that our activities are in accordance with the current sanctions," Eek added, without commenting on whether Statoil would be able to continue taking the shipments. A source at one South Korean energy company said his firm had stopped taking Iranian LPG since mid-October as Japanese insurers were refusing to provide cover for the cargoes. Japanese shipping company Phoenix Tankers is one such company. Phoenix shipped Iranian LPG to South Korea earlier this year on a spot basis, said Tetsutaro Kozai, a spokesman at Mitsui OSK, the parent company of Phoenix. "It is now up to our customers as the EU has discussed but not yet decided if LPG is subject to sanctions," he said. "If there is such a spot order, we'll comply with the EU's decision and consider if we can transport safely before accepting it." This illustrates the problems in conducting the trade, even before the EU legislation officially comes into force. London is the global centre for shipping insurance and with Britain an EU member, the sanctions will paralyze cover for Iranian gas. Likewise, shippers do not want to touch any trade that could risk business with clients such as major oil firms. "Now some Western majors say if a vessel has loaded in Iran in the last three cargoes, they will not charter her," said one LPG trader. SUPPLY CRUNCH Another unintended consequence is that the sanctions are likely to push up Europeans' energy bills as winter nears. Europe is already facing a supply crunch for heating and diesel fuel. Germany has even started to encounter diesel and other fuel shortages as continental refineries have cut runs due to low crude supplies. Europe is likely to find itself struggling for supplies of yet another winter fuel if buyers in South Korea and elsewhere try to make up for their loss of Iranian LPG on the open market. "It is a game changer," said another LPG trader. "Whatever the case, no more liftings equals massive impact on worldwide availabilities coming into winter." Iran has vied with Kuwait as the fourth largest LPG exporter in the Middle East, behind Qatar, the United Arab Emirates and Saudi Arabia, several traders said. Propane is used for heating, in agriculture and in petrochemicals along with butane, which in turn is also used for cooking in many developing countries and as a winter gasoline component. Iran had been exporting LPG on six or seven Very Large Gas Carriers (VLGC) per month - between around 275,000-325,000 metric tons or nearing 4 million metric tons a year, several traders said. South Korea was taking between two and four cargoes a month, market sources said, and Statoil usually one per month. Together they accounted for around two thirds of the Iranian exports. A Kuwait-based customer, Arab Maritime Petroleum Transport Company has also been lifting about one cargo a month from Iran, the Korean source said. AMPTC has been supplying LPG to Syria, according to documents reviewed by Reuters. Tehran has backed Syrian President Bashar al-Assad as his government fights rebels trying to overthrow him. BILLION DOLLAR TRADE South Korea imported LPG worth more than $1 billion in the first eight months of 2012, according to data from the Korea International Trade Association. Iran provided 37 percent of its propane imports and 22 percent of the butane. South Korea's government has asked the EU for clarification on the new sanctions, an official said. Another source said imports were continuing from Iran but these may be ships which left Iran before the EU announced the sanctions on October 15. Two LPG tankers loaded at the Iranian port of Assaluyeh around October 15. The Gas Vision tanker was heading to South Korea and the Clipper Sun tanker, on a long term charter to Statoil, is heading for Singapore, market sources and Reuters AIS Live ship tracking showed. If its imports were hit, South Korea would have no choice but to buy LPG on the spot market. South Korea would look for alternative supplies from Saudi Arabia, Qatar and the UAE if it could no longer import from Iran, a source at a buyer of Iranian LPG said. The same suppliers have helped to fill the gap on international markets left by the reduction in Iran's crude oil exports this year. Three South Korean firms - E1, SK Gas and Samsung Total - import propane and butane, sources said. (Additional reporting by Justyna Pawlak in Brussels and Risa Maeda in Tokyo; Writing by Simon Webb; Editing by David Stamp) == U.S. gasoline prices post biggest fall in nearly 4 years: survey Sun, Nov 04 17:08 PM EST NEW YORK (Reuters) - The average U.S. price for a gallon of regular gasoline took its biggest drop since 2008 in the past two weeks, due to lower crude oil prices, a big price drop in pump prices in California and Hurricane Sandy, according to a widely followed survey released on Sunday. Gasoline prices averaged $3.5454 per gallon on November 2, down 20.75 cents from October 19 when drivers were paying $3.7529 at the pump, Lundberg said. The decline was the biggest two-week price drop since the survey recorded a 21.9 cents price decline December 5, 2008 due to a crash in petroleum demand during the global recession. Even though many people had to line up for gasoline for hours after Sandy devastated much of the Northeast coast, the storm played a part in the price decline as many would-be consumers were not able to travel as a result, according Trilby Lundberg, editor of the Lundberg Survey. Lundberg also cited the seasonal dip in demand that typically comes after August. While demand appeared to be very high for gasoline in New York and New Jersey after the storm, Lundberg said that purchases were down because many people could not get to fuel. However, supply shortages were not causing an increase in the average price of gasoline, according Lundberg. "There is a fear among retailers that they will be accused and prosecuted for price gouging if they raise prices enough to prevent running out," she said, adding that the problems would be unlikely to end soon. "It's going to be a long and hard recovery for infrastructure and fuel supply but also for fuel demand," Lundberg said. Another reason for the total U.S. price decline in the latest survey is California, the biggest state consumer, where pump prices fell 49 cents in past two weeks after an extreme price increase a month ago because of refinery problems. The November 2 survey shows that gas prices have fallen a total of 29.21 cents in the last month, Lundberg said. The highest prices for regular gasoline recorded in the November 2 survey were in San Francisco at $4.05 a gallon, while drivers in Memphis, Tennessee were paying the least at $3.11 per gallon. (Reporting By Sinead Carew; Editing by Marguerita Choy) ======== LNG cost blowouts jeopardise Australia’s future Reported by Mike King, The Motley Fool. Wednesday, November 14, 2012 Topics in this article: Asx,Santos,Liquefied Natural Gas Limited,Woodside Petroleum,Origin Energy,Oil Search Australia’s biggest resource project, the Gorgon liquefied natural gas (LNG) plant, could see costs blow out from the current $43 billion to more than $60 billion. This is due to higher costs, productivity issues and the high Australian dollar. According to the Australian Financial Review, Gorgon LNG faces a $20 billion cost blowout, but will still go ahead, as it’s too late to pull out of the project. US oil giant, Chevron is expected to reveal the massive cost increase before the end of the year, as well as a possible delay in production of gas until late 2014. Related: The $164 billion risk to the economy On Monday, ExxonMobil, Oil Search Limited (ASX: OSH) and Santos Limited (ASX: STO) increased the cost estimates for the PNG LNG project from US$16 billion to US$19 billion, due to the high Australian dollar, bad weather and logistical issues. BG Group and Santos both lifted the costs of their Queensland based LNG projects earlier this year, while Woodside Petroleum’s (ASX: WPL) Pluto LNG project is estimated to have run a third over budget, and started 16 months late. Origin Energy (ASX: ORG) has conceded that its Australia Pacific LNG project has been hit by the high Australian dollar. Gas and LNG projects were viewed as being the next boom for Australia, following the end of the mining boom – with more than $164 billion being invested in new projects that would see Australia become one of the largest suppliers of LNG in the world, if not the largest, by 2020. The cost blowouts are not just the only threats. Recent discoveries of massive gas fields off the coast of Africa and potential US gas exports also pose a risk to Australia’s LNG industry. That could result in expansion plans being delayed or cancelled, and some projects, such as Woodside’s Sunrise LNG project, not to go ahead at all. The Foolish bottom line A falling Australian dollar would do much to alleviate some of the costs, but it appears that labour costs in Australia are too high and we risk losing significant amounts of investment capital to other regions. If you only invest in one company this year, make it our “Top Stock for 2012-13”. Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report. =============== آئی پی گیس پائپ لائن منصوبہ پر اپنے حصہ کا کام مکمل نہ کرنے پر یکم جنوری 2015ء سے پاکستان کو یومیہ 3ملین ڈالر جرمانہ کا سامنا کرنا پڑ سکتا ہے، شاہد خاقان عباسی، حکومت ابھی بھی آئی پی گیس پائپ لائن پر پرعزم ہے ، ایرانی حکومت سے اس پر بات چیت جاری ہے ، کوشش کررہے ہیں کہ معاملات بات چیت سے طے ہوجائیں ورنہ عالمی ثالثی عدالتوں میں بھی جایا جاسکتا ہے ، پاکستان کے دیگر ممالک سے اپنے تعلقات ہیں ، قطر سے ایل این جی کی درآمد پر سعودی عرب سمیت کسی ملک کو اعتراض نہیں ہوگا ، تیل و گیس پر فروری تک حکومت ساڑھے اٹھارہ ارب کی سبسڈی دے چکی ہے ، گھریلو صارفین کے لئے گیس کی قیمتیں کافی کم ہیں ، نظر ثانی کرنا پڑے گی ، فرٹیلائزر اورتوانائی کے شعبہ کو گیس کی فراہمی حکومت کی اولین ترجیح ہے ، میڈیا سے گفتگو: اسلام آباد(اُردو پوائنٹ اخبار آن لائن۔28مارچ۔ 2014ء) وفاقی وزیر برائے پٹرولیم و قدرتی وسائل شاہد خاقان عباسی کا کہنا ہے کہ آئی پی گیس پائپ لائن منصوبہ پر اپنے حصہ کا کام مکمل نہ کرنے پر یکم جنوری 2015ء سے پاکستان کو یومیہ 3ملین ڈالر جرمانہ کا سامنا کرنا پڑ سکتا ہے ، حکومت ابھی بھی آئی پی گیس پائپ لائن پر پرعزم ہے ، ایرانی حکومت سے اس پر بات چیت جاری ہے ، کوشش کررہے ہیں کہ معاملات بات چیت سے طے ہوجائیں ورنہ عالمی ثالثی عدالتوں میں بھی جایا جاسکتا ہے ، پاکستان کے دیگر ممالک سے اپنے تعلقات ہیں ، قطر سے ایل این جی کی درآمد پر سعودی عرب سمیت کسی ملک کو اعتراض نہیں ہوگا ، تیل و گیس پر فروری تک حکومت ساڑھے اٹھارہ ارب کی سبسڈی دے چکی ہے ، گھریلو صارفین کے لئے گیس کی قیمتیں کافی کم ہیں ، نظر ثانی کرنا پڑے گی ، فرٹیلائزر اورتوانائی کے شعبہ کو گیس کی فراہمی حکومت کی اولین ترجیح ہے ۔ جمعرات کے روز سینٹ کی قائمہ کمیٹی برائے پٹرولیم و قدرتی وسائل کے اجلاس کے بعد پارلیمنٹ ہاؤس میں میڈیا سے گفتگو کرتے ہوئے وفاقی وزیر برائے پٹرولیم و قدرتی وسائل شاہد خاقان عباسی نے کہا ہے کہ حکومت ابھی بھی ایران پاکستان گیس پائپ لائن منصوبے کے حوالے سے پرعزم ہے اور اس حوالے سے ملک پر کوئی بیرونی دباؤ نہیں ہے ہم ایران پاکستان گیس پائپ لائن پر کام جاری رکھیں گے ۔ آئی پی گیس پائپ لائن پر اگر پاکستان اپنے حصہ کا کام مکمل نہیں کرسکتا تو یکم جنوری 2015ء سے 3ملین ڈالر یومیہ جرمانہ دینا پڑے گا ۔ اس حوالے سے ایرانی حکومت سے بات چیت جاری ہے جس وقت ایران سے آئی پی معاہدہ کیا تھا اس وقت پابندیاں اتنی سخت نہیں تھیں نہ ہی اندازہ تھا کہ وہ مستقبل میں کس حد تک سخت ہوسکتی ہیں ۔ قطر سے ایل این کی کی درآمد پر بات کرتے ہوئے شاہد خاقان عباسی کا کہنا تھا کہ پاکستان کے تمام ممالک سے علیحدہ تعلقات ہیں تاہم قطر سے ایل این جی کی درآمد پر سعودی عرب کو اعتراض نہیں ہوگا پھر بھی ہمیں اپنے مخصوص حالات کو تنظر میں رکھنا ہوگا ۔ ایک سوال کے جواب میں وفاقی وزیر کا کہنا تھا کہ امریکہ میں 2010-11ء میں کمپنیوں نے خام ایل این جی کی برآمد کے لئے درخواستیں دی تھیں تاہم باقاعدہ برآمد 2017ء میں شروع ہوگی اور اس وقت امریکہ اس وقت کے عالمی نرخوں کے مطابق برآمد کرے گا لہذا یہ کہنا قبل ازوقت ہوگا کہ امریکی کمپنی دس ڈالر پر پاکستان کو ایل این جی فراہم کرسکے گی ۔ کوئی بھی کمپنی کم نرخوں پر پاکستان کو ایل این جی فراہم کرے ہم لینے کے لیے تیار ہیں فی الوقت صرف قطر کم نرخ دے رہا ہے انہوں نے کہا کہ پٹرولیم مصنوعات کی قیمتوں میں کمی کا فیصلہ اوگرا کو کرنا ہے ان کی قیمتوں میں کمی کے حوالے سے فیصلہ کرنے کے لیے قیمتوں میں عالمی رحجان ، ڈالر کی قدر ، زرمبادلہ کی شرح اور ایک ماہ میں ہونے والے عالمی معاہدوں کو دیکھیں گے تاہم فروری تک گیس کی قیمتوں میں حکومت ساڑھے اٹھارہ ارب روپے کی سبسڈی دے چکی ہے ۔ انہوں نے کہا کہ گیس کی قیمتوں پر نظر ثانی کرنا پڑے گی اور حکومت پہلے بھی گھریلو استعمال کی گیس پر کافی سبسڈی دے رہی ہے فی الوق گیس کی طلب اور رسد کا فرق پچاس فیصد ہے ۔ انہوں نے تصدیق کی کہ آل پاکستان سی این جی ایسوسی ایشن کے ساتھ مذاکرات میں آل پاکستان سی این جی ایسوسی ایشن نے حکومت کو شب دس بجے سے صبح چار بجے تک سی این جیل سٹیشنوں کو گیس کی فراہمی کی درخواست کی تھی جس پر حکومت ابھی غور کررہی ہے تاہم کوئی فیصلہ نہیں کیا ۔ وفاقی وزیر برائے پٹرولیم و قدرتی وسائل کا کہنا تھا کہ آنیوالے دنوں میں حکومت کی اولین توانائی اور فرٹیلائزر کے شعبوں کو گیس کی فراہمی ہے ان کو اضافی گیس کی فراہمی سے آٹھ ارب ڈالر کی بچت ہوئی ہے اور انہوں نے کہا کہ حکومت کی کوشش ہے کہ بین الاقوامی درآمدات کا تناسب کم سے کم شرح پر لایا جائے ۔ یو جی ایف کے مسئلے پر سوالات کے جواب دیتے ہوئے شاہد خاقان عباسی کا کہنا تھا کہ یو جی ایف پر عدالتی فیصلہ آچکا ہے تاہم حکومت فیصلے میں نظر ثانی کے لیے اپیل دائر کرے گی ۔ ملک میں سی این جی ٹرمینل کی تعمیر کے حوالے سے ایلنجیئی کمپنی کیخلاف اعتراضات پر انہوں نے کہا کہ پورٹ قاسم اتھارٹی نے کمپنی کو این او سی جاری کرنا ہے پی ایس او آئل ریفائنری کے حوالے سے وفاقی وزیر کا کہنا تھا کہ بنیادی طور پر پئل ریفائنری کا سرمایہ دار صوبہ خیبر پختونخواہ ہے پی ایس او صرف ریفائنری کی تعمیر و تنصیب میں امداد فراہم کرے گی مرکزی حکومت صوبوں کو صرف امداد فراہم کرسکتی ہے تاہم فیصلے ان کو خود ہی کرنے ہیں ۔